BP Victims' Fund to Fight Bogus Claims, Feinberg Says

By Jim Snyder -
Jun 26, 2010

The administrator of the $20 billion
fund for victims of BP Plc’s oil spill said he will use federal
fraud investigators to deter bogus claims and pledged to protect
personal information submitted by businesses and individuals.

“Nothing can destroy the credibility of a program quicker
than allegations of fraud,” administrator Kenneth R. Feinberg
said yesterday in an interview for Bloomberg Television’s
“Political Capital With Al Hunt” this weekend. The Justice
Department’s fraud section is “the best there is,” he said.

The fund will disclose enough about the claims to satisfy
state officials without disclosing personal information, similar
to a process Feinberg said he followed in paying victims of the
Sept. 11 terrorist attacks.

Feinberg has been meeting state and local officials along
the Gulf Coast and said in about 30 days his office should be
operating to process claims. BP agreed to set up the fund June
16 under pressure from President Barack Obama, and Feinberg was
selected to oversee the claims program.

A $100 million fund set up by BP to pay oil-industry
workers for losses tied to Obama’s six-month drilling moratorium
might be depleted before the ban expires and Feinberg said if
the ban survives a court challenge he may need to request more
cash.

“I’ll have to go back to the administration and to BP and
request that the $100 million is insufficient and additional
funds should be provided,” he said.

Feinberg, 64, has been the Treasury Department’s special
master for executive compensation for a year, reviewing the pay
at companies that received U.S. aid. The Washington lawyer also
mediated disputes over compensation for damages from the 2001
terrorist attacks as head of the Victim Compensation Fund.

Feinberg said he met with officials in the Justice
Department’s fraud section about helping to administer the
independent claims office for the spill victims. The agency
agreed to propose a plan for deterring fraud, Feinberg said.

“The Department of Justice Criminal Division along with
appropriate U.S. attorney’s offices will be closely monitoring
to prevent and deter fraud in the claims process,” said Alisa
Finelli, a Justice Department spokeswoman.

The London-based company had paid out almost $126 million
for more than 39,000 claims, with more than 74,000 filed,
according to a statement yesterday.

BP Claims, Costs

BP said it has paid about $2.35 billion in costs tied to
the spill since the April 20 explosion on the Deepwater Horizon
rig, which killed 11 workers and unleashed the worst U.S. oil
spill. The total includes containing the oil, drilling two
relief wells, paying victims’ claims and providing grants to
states along the Gulf.

The Feinberg-run claims fund is already distributing
emergency payments and he has been encouraging victims to submit
claims.

Feinberg said he assured Louisiana Governor Bobby Jindal
that the claims review will be transparent, without violating a
person’s privacy. He said the 9-11 victims’ fund worked out with
states and the federal government a program that was transparent
and protected privacy.

“The last thing that anybody should want is individualized
data provided government that would result in individuals being
very reluctant to file a claim,” he said.

Congressional Talks

Feinberg said he has discussed what information should be
released as part of the process with House Judiciary Committee
Chairman John Conyers, a Michigan Democrat.

The claims facility Feinberg runs will add to the
infrastructure BP has set up, Feinberg said. The company has
hired 750 workers and established more than 25 local offices to
handle claims. “They deserve some credit for setting up the
program,” he said.

Feinberg said he didn’t know what additional resources may
be needed to accelerate payments.

“I’m hoping with additional support, I don’t know how many
yet, we’ll be able to process all of the claims very quickly.”